Jack Is Considering Adding Toys to His General Store

Multiple Choice

Jack is considering adding toys to his general store.He estimates the cost of toy inventory will be $4,200.The remodeling and shelving costs are estimated at $1,500.Toy sales are expected to produce net annual cash inflows of $1,200,$1,500,$1,600,and $1,750 over the next four years,respectively.Should Jack add toys to his merchandise if he requires a three-year payback period? Why or why not?

A) Yes; because the payback period is 2.94 years
B) Yes; because the payback period is 2.02 years
C) Yes; because the payback period is 3.80 years
D) No; because the payback period is 2.02 years
E) No; because the payback period is 3.80 years